Lal Bahadur Shastri Educational Society & Anr. vs Delhi Development Authority & Ors.
Background
Two charitable educational/institutional trusts had challenged a Delhi Development Authority (DDA) notification imposing additional Floor Area Ratio (FAR) charges for using enhanced construction rights under a 2008 notification. While their challenge was pending in the Delhi High Court, they voluntarily deposited the disputed amounts to get their building plans sanctioned quickly and proceed with construction, rather than waiting for the case to be decided. Later, the DDA itself issued a fresh notification exempting income-tax-exempt educational and healthcare/social-welfare societies from these FAR charges, so the original challenge became unnecessary, the writ petitions were disposed of without a ruling on merits, and the deposited amounts were ordered to be refunded, but without interest. The appellants came to the Supreme Court seeking interest on the refunded amount for the period their money was held.
Decision Breakdown
The Supreme Court rejected the claim for interest on the refunded deposits. It reasoned that the deposit was made voluntarily by the appellants (to speed up their own construction), not because of any coercive or wrongful "act of the Court," and that at the time of deposit the underlying notification imposing the charges was still validly in force. There was never a judicial finding that the demand was illegal; it was simply overtaken by a later exemption notification. Since there was no adjudication establishing the amount was wrongly retained, the legal principle that "no one shall suffer because of an act of the court" (actus curiae neminem gravabit) did not apply. However, the Court left open the separate question of compensation for any unreasonable delay in actually refunding the money after it became due, allowing the appellants to pursue that through appropriate separate proceedings.
Lesson Learnt
Voluntarily depositing a disputed amount with authorities to speed up your own project (rather than waiting for a court to decide the underlying dispute) generally does not entitle you to interest on that amount later, unless a court actually finds the original demand was illegal: the right to interest depends on there being a wrongful demand established in law, not just funds sitting with the government for a period of time.